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<br />Water markets can mean an end to water shortages <br /> <br />Page 20 of27 <br /> <br />The resistance to cross-border trading between the <br />Canada and the United States stems from the fact <br />that most proposals call for massive projects to <br />deliver water from remote regions of Canada to <br />populated areas of the United States. Such <br />grandiose political schemes frighten the Canadians, <br />who fear that low prices will create an insatiable <br />thirst south of the border. Because the water <br />changes hands between governments instead of <br />individuals, water users in the United States would <br />not have to pay the enormous costs of the project <br />directly; the real cost of the water would be hidden <br />in taxes. In contrast, citizens of the "selling" <br />country--Canadians--would gain little or nothing <br />and potentially lose environmental benefits. <br /> <br />True water marketing across borders would require <br />that these subsidies be eliminated so that buyers <br />would pay the full cost of the water, and sellers <br />would be compensated for the water they give up. A <br />water federation of the kind proposed by Huffman <br />would help clarify water rights and facilitate trades <br />between individual willing sellers and willing <br />buyers as in the Murray-Darling example. "By <br />shifting water use decisions from the countries to <br />the actual water users," says Huffman (1994, 157), <br />"a transboundary water market will change the <br />focus from the acquisition and exercise of political <br />influence to the greatest productivity of the water." <br /> <br />Conclusion <br /> <br />"Gloom-and-doom predictions of future water <br />crises will probably always plague us. Fortunately, <br />predictions of natural resource shortages are often <br />wrong because they ignore the impact of market <br />forces on supply and demand. Despite predictions <br />that we will run out of everything from copper to <br />tungsten and that we will have shortages of <br />everything from energy to food, markets--imperfect <br />as they may be--have worked well to avert crises. <br />Higher prices induce suppliers to find new sources <br />of supply and users to conserve and search for <br />substitutes. <br /> <br />Water allocation is no exception. If governments <br />send the wrong signals to suppliers and users by <br />subsidizing water storage and delivery, exponential <br />growth in consumption will inevitably run into <br /> <br />http://www . perc.orglpublications/policyseries/priming_ full. php ?s=2 <br /> <br />9/12/2006 <br />